In a major strategic move,
Arris Group Inc.
) entered into an agreement to sell approximately 10.6 million of
its common stock to
). The total consideration of the deal is $150 million. The cable
TV equipment vendor stated that this agreement is part of its
previously announced acquisition of the cable set-top box
business of Motorola Mobility, a subsidiary of
Last December, Arris decided to purchase the set-top box
business of Motorola Mobility for $2.35 billion. Of this, $2.05
billion will be paid in cash and $300 million worth common stock
of Arris will be given to Google. The Comcast deal will reduce
the total number of Arris' shares to be issued to Google while
raising the cash consideration by $150 million.
Consequently, both Comcast and Google will command 7.85% of
the total outstanding shares of Arris. The completion of the
Comcast deal is subject to the successful transition of the
Motorola cable set-top business to Arris, expected to take place
by the second quarter of 2013.
The important feature of this deal is that Arris will get two
large companies namely Comcast and Google as its investors that
have financial interest in the success of its cable set-top box
venture. Notably, Comcast is the largest customer of Arris.
Presently, Arris is a small contender in the high-speed video and
Internet delivery market.
The acquisition of the Motorola set-top box business will
undoubtedly help Arris strengthen its foothold in the video
offerings market. Further, this deal will strengthen Arris'
patent portfolio and provide access to several patents of
Currently, Arris, Comcast and Google have a long-term Neutral
recommendation. While Comcast and Google have a Zacks Rank #3
(Hold) for the short term, Arris has a Zacks Rank #2 (Buy).
ARRIS GROUP INC (ARRS): Free Stock Analysis
COMCAST CORP A (CMCSA): Free Stock Analysis
GOOGLE INC-CL A (GOOG): Free Stock Analysis
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